Do the numbers stack up?

SMSF property isn’t magic. It’s maths. Let’s do the maths.

We’ve finished Part 1 of this book. You’ve been through the honest filter. You’ve thought about whether SMSF property is right for you. You’ve considered when to walk away.

Now we’re into Part 2: Can you actually do this?

This is Tick 2 of the Tradie’s Two-Tick Test. You’ve decided the job might be worth doing. Now we need to check if you’ve got the tools, the permits, and the resources to actually do it.

And that starts with the numbers.

Counting coffees

Imagine you’re opening a café.

Before you sign the lease, before you buy the espresso machine, before you design the menu, you need to know one number: your break-even point.

How many coffees do you need to sell each day just to cover your costs? Rent, wages, beans, milk, electricity, insurance. Add it all up, divide by your profit per coffee, and you’ve got a number.

If you need to sell 200 coffees a day to break even, and the foot traffic in your area suggests you’ll sell 150, you’ve got a problem. It doesn’t matter how good your coffee is. The maths doesn’t work.

SMSF property is exactly the same.

Before you get excited about growth corridors and rental yields and tax benefits, you need to know your break-even point. How much does this whole thing cost to run? And can your returns beat that cost?

Let’s find out.

The true cost of an SMSF

Here’s what most people don’t realise until they’re already in: SMSFs are expensive to run.

Not expensive like a luxury car. Expensive like a small business. There are fixed costs every single year, whether your investments go up, down, or sideways.

Let me break it down.

Cost item	Annual cost
SMSF accountant and tax return	$1,500 to $3,500
Independent audit (compulsory)	$500 to $800
ASIC annual fee	$65
ATO supervisory levy	$287
Investment platform fees (if using one)	$0 to $500
Insurance (life, TPD, income protection)	Varies
Total annual running costs	$3,000 to $8,000+

And that’s just the baseline. If your SMSF holds property, add more.

Property-specific costs	Annual cost
Property management fees (8 to 10% of rent)	$1,500 to $3,000
Landlord insurance	$1,000 to $2,000
Council rates	$1,500 to $3,000
Maintenance and repairs (budget 1% of value)	$4,000 to $6,000
Water rates and other levies	$500 to $1,000
Strata fees (if applicable)	$2,000 to $5,000
Total property-specific costs	$8,500 to $20,000+

Add those together and you’re looking at $11,500 to $28,000 per year in total costs for an SMSF that holds property.

That’s real money. Every year. Whether the property goes up in value or not.

Now, to be fair, some of those property costs would apply whether you owned the property inside super or outside super. Rates, insurance, maintenance. Those don’t disappear just because you buy personally.

But the SMSF-specific costs of $3,000 to $8,000 per year? Those are additional. They only exist because you chose to go the SMSF route.

And that’s what we need to compare.

The break-even calculation

Here’s the question that matters: At what super balance do SMSF costs start to make sense?

Let’s work through it.

Say your industry fund charges 0.6 per cent per year in fees. On a $300,000 balance, that’s $1,800 per year.

Your SMSF will cost at least $4,000 per year to run (being conservative). That’s $2,200 more than your industry fund.

For the SMSF to be worthwhile on fees alone, your investments need to earn an extra $2,200 per year. On $300,000, that’s an extra 0.73 per cent return you need to generate just to break even on the higher costs.

Is that achievable? Maybe. But it’s not free money. It’s a hurdle you need to clear.

Let’s look at different balance levels.

Super balance	SMSF cost as %
$100,000 4	.0% to 8.0%
$200,000 2	.0% to 4.0%
$300,000 1	.3% to 2.7%
$500,000 0	.8% to 1.6%
$750,000 0	.5% to 1.1%
$1,000,000 0	.4% to 0.8%

See the pattern?

At $100,000, SMSF costs are brutal. You’re losing 4 to 8 per cent of your balance every year just to keep the lights on.

At $500,000, the picture changes. Costs are 0.8 to 1.6 per cent. Still higher than a cheap industry fund, but now you’re in the ballpark. If your SMSF investments can beat the industry fund by even a small margin, you come out ahead.

At $1,000,000, costs drop to under 1 per cent. Now you’ve got room to move. The SMSF structure starts to make real financial sense.

This is why the practical minimum is $200,000. Below that, the maths is brutal.

Running the numbers with Sarah and Marcus

Sarah and Marcus sat down with their SMSF accountant to run the numbers. Here’s what they found.

Current situation in industry fund:

• Balance: $420,000

• Annual fees (0.7%): $2,940

• Five-year average return: 7.8%

• Net return after fees: 7.1%

• Annual growth (net): $29,820

Projected SMSF scenario:

• Balance: $420,000

• Annual SMSF costs: $5,000 (1.2% of balance)

• Required return to match industry fund: 8.3%

So Sarah and Marcus need their SMSF investments to return 8.3 per cent per year just to match what their industry fund was delivering after fees.

Is that realistic?

Over the long term, Australian residential property has returned around 6 to 7 per cent per year in capital growth, plus 3 to 4 per cent in rental yield. Call it 9 to 11 per cent gross.

But that’s gross. After property management fees, maintenance, insurance, rates, and vacancies, the net return drops to maybe 5 to 7 per cent.

Hang on. That’s less than their industry fund was delivering.

So why would they bother?

The other side of the ledger

Here’s where it gets more nuanced.

Pure return comparison isn’t the whole story. There are other factors that might tip the balance.

Tax benefits. Inside super, rental income is taxed at 15 per cent (or zero in pension phase). Capital gains held longer than 12 months get a one-third discount, so effectively 10 per cent. Outside super, you’d pay your marginal tax rate, which could be 30 per cent, 37 per cent, or even 45 per cent. That’s a meaningful difference over decades.

And the gap widened in 2026. From 1 July 2027, the old 50 per cent capital gains discount outside super is gone for individuals and trusts, replaced by inflation indexation plus a 30 per cent minimum tax on gains. Inside super, nothing changed: the May 2026 budget deliberately left the one-third discount, the 15 per cent rate and the pension-phase zero rate alone. Whatever else you conclude from this chapter, the relative tax case for holding property inside super has never been stronger.

Control. Some people value being able to choose exactly what they invest in. Your industry fund might be invested in things you don’t believe in or don’t understand. An SMSF lets you pick.

Commercial property and your business. If you own a business and want to buy your business premises through super, SMSF is the only way to do it. The business pays rent to your super fund instead of to a landlord. This can be a genuine game-changer. We’ll cover this in Chapter 5.

Estate planning. SMSFs give you more control over what happens to your super when you die. Binding death benefit nominations, reversionary pensions, and other structures that might not be available in an industry fund.

Asset protection. Super is generally protected from creditors in bankruptcy. If you’re in a high-risk profession or running a business, this might matter to you.

These factors don’t show up in a simple return comparison. But they might matter to you.

The question is whether they matter enough to justify the extra cost and complexity.

The honest comparison

Let me give you the comparison framework I use.

Step 1: Know what you’re getting now. Log into your industry fund account. Find your actual return over the past 5 years (not the advertised return, your actual return). Find your actual fees. Calculate your net return.

Step 2: Estimate your SMSF costs honestly. Get quotes from SMSF accountants. Don’t assume the cheapest option. Budget for the annual audit. Include everything.

Step 3: Project your SMSF returns conservatively. Use 6 per cent for property. Not 10 per cent. Not what some spruiker told you. Use conservative numbers and be pleasantly surprised if you beat them.

Step 4: Compare net to net. Industry fund return minus fees versus SMSF return minus costs. Apples to apples.

Step 5: Factor in the intangibles. Does control matter to you? Tax benefits? Business premises? These don’t have dollar values, but they have value.

If the SMSF wins on pure numbers, great. If it loses on pure numbers but the intangibles matter enough to you, that can still be a yes. If it loses on numbers and the intangibles don’t really apply, that’s a no.

The danger of optimistic assumptions

Here’s where people get into trouble.

They build their SMSF case on optimistic assumptions. “Property will grow 8 per cent a year.” “I’ll never have a vacancy.” “Interest rates will stay low.” “My contributions will keep increasing.”

Then reality hits.

Property grows 3 per cent instead of 8 per cent. The tenant trashes the place and leaves. Interest rates spike. They lose their job and can’t contribute.

Suddenly the numbers that looked good on paper are underwater.

The antidote is conservative assumptions and stress testing.

What happens if your property grows at 4 per cent instead of 7 per cent? What if it sits vacant for three months? What if interest rates rise 2 per cent? What if you can’t contribute for a year?

Run those scenarios. If the numbers still work, you’ve got a robust strategy. If the numbers collapse under any stress, you’ve got a fragile strategy that’s one bad year away from disaster.

Sarah and Marcus stress test their plan

Sarah and Marcus didn’t just run the baseline numbers. They stress tested.

Scenario 1: Property grows at 4% instead of 6%.

Result: Net return drops to around 7%. Still close to their industry fund. Acceptable.

Scenario 2: Three months vacancy.

Result: Lose about $6,000 in rent. Their cash buffer inside the SMSF covers it. Uncomfortable but survivable.

Scenario 3: Interest rates rise 2%.

Result: Annual loan repayments increase by $5,400. Rental income still covers repayments, but with less margin. They’d need to top up contributions slightly.

Scenario 4: Marcus loses his job for 12 months.

Result: Can’t make employer contributions, but Sarah’s income covers personal contributions. The SMSF survives on rental income alone. Tight, but manageable.

Scenario 5: All of the above happen at once.

Result: This is ugly. They’d be drawing down their cash buffer, potentially unable to make repairs, and stressed. But they wouldn’t be forced to sell. The fund survives, barely.

That fifth scenario is the one that matters most. If your SMSF can survive the worst case, even if it’s painful, you’ve got a resilient structure.

If the worst case means forced sale, compliance breach, or financial ruin, you’re too stretched.

Sarah and Marcus decided they could live with the worst case. It would be awful, but survivable. That gave them confidence to proceed.

The bottom line

SMSF property isn’t magic. It’s maths.

The maths works when your balance is high enough that SMSF costs are a small percentage, your expected returns beat those costs with room to spare, and you’ve stress tested for when things go wrong.

The maths doesn’t work when your balance is too low (under $200,000), you’re relying on optimistic assumptions, or one bad year would sink you.

Do the maths before you fall in love with the idea.

Because the numbers don’t care about your feelings. They either stack up or they don’t.

Find your sweet spot, or have the guts to walk away.